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Colombia: With Peace On The Horizon, New Risks Emerge

BOGOTA – 2014 is shaping up to be a watershed year for Colombia. The big story coming out of the country is continuing peace negotiations between the government the country’s biggest guerrilla group, the Revolutionary Armed Forces of Colombia (FARC), which could put an end to more than five decades of conflict. But the country will also hold three major elections—including a legislative vote on March 9 and a presidential vote on May 25—that could alter the nation’s political dynamics. As described in Control Risks’ recent RiskMap report, the overall progress appears positive, but the complex dynamics will create new risks for the country.

The greatest source of optimism for Colombia is the peace process, and a signed peace agreement continues to be the likeliest outcome of the government’s talks with the FARC. Current negotiations are the most promising attempt at peace in the history of Colombia’s internal conflict, but major issues remain unresolved. The two sides have still not agreed on a transitional justice framework for a possible FARC demobilization and the legal consequences for its commanders charged with war crimes and other atrocities. Practical aspects on the disarmament, demobilization and reintegration process, reparation of victim’s rights and the verification of the entire process are also still undefined.

But considerable progress has also been made and both sides have already signed preliminary agreements. These include a May 2013 agreement on rural development and a November 2013 agreement on political participation. Barring any unforeseen developments over the coming months, a further preliminary agreement on the issue of transitional justice seems likely before the 25 May presidential elections. A final agreement is expected before the end of 2014, putting at least a formal end to more than 50 years of conflict.

The re-election of incumbent President Juan Manuel SantosSantos seems all but certain, even if he is unlikely to win by an absolute majority in the first round. This will mean continuity in government policy, especially the government’s broadly positive outlook on foreign investment and investor protection. It also increases the likelihood of a successful end to the peace negotiations.

While a peace agreement is a fundamentally positive development, it will almost certainly stir up undercurrents that increase political risk. Most immediately, President Santos’s party seems is likely to lose seats in the Colombian legislature in legislative elections this coming weekend. While Santos will probably retain a majority, it will be smaller, and he will have to spend more political capital to achieve his goals. And even with the current majority, major reforms on the president’s agenda since his election in 2010 have not been passed. These include changes to the healthcare, pension, judicial and education systems. Santos must devote considerable political capital to implementing the likely peace agreement, and with a smaller majority on Congress, it could come at the expense of necessary reforms.

A peace agreement, and an end to 50 years of an allegedly “communist” insurgency, will boost democratic leftist parties by removing the stigma of terrorism. It therefore paves the way for a growing role of leftist parties in the traditionally conservative Colombian political establishment. The fact that Santos will need to negotiate to obtain support for the peace agreement and its implementation will further empower the political left. The rise of the left could increase political volatility in the short term. In the medium and long term, it could result in stricter rules on environmental standards, labor rights and corporate social responsibility as well as reforms to the tax and royalty system.

Moreover, the security implications of a signed peace agreement are not as clear-cut as they might seem. A long-term improvement in overall security seems probable, but the security will likely deteriorate in the short term, as rival groups struggle to fill the power vacuum left by the FARC’s (at least partial) demobilization. Armed violence in rural areas stands to increase, and could contribute to a more complex situation before the dust settles and a preliminary order is re-established.

Oliver Wack is an analyst at Control Risks, an international political, integrity and security risk consultancy. For more analysis, sign up for a free trial of our Country Risk Forecast and PRIME services.

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